What’s Getting Results?
Most businesses, large and small, have no idea what their people are doing, nor why they are doing it.
Entrepreneurs need to know what is being done, why it is being done, and what outcomes are supposed to be the result of it. I’ve seen a lot of bootstrapped business owners who just assume activity generates results without ever measuring it.
They, typically, were involved in the design of the job and its tasks because they were the ones doing the job when they started the company and assume that the tasks that make up the job get consistent results.
What happened was these entrepreneurs used trial-and-error to create the job and it seemed to get some semblance of repeatable results. They then hired someone to do the job to perform it exactly like they did it. Sure, they hoped that the new hire would improve the process over time, but didn’t want the person deviating too much as it might stop getting results.
A lot of inefficiency and ineffectiveness gets baked into the DNA of a company with this haphazard process of figuring out what works (or at least seems to work).
This is why I developed the Optimal Activity Audit for my clients.
My management practice is based on two concepts — profitability and objective results, not tasks. I don’t have clients measure activity just to know how much time a task takes. Knowing duration by itself is pointless. What needs to be discovered is: should this activity be done and if so does it reliably and optimally provide the desired outcome it is meant to do?
Old school management says let’s become more profitable by having a task take less time. Unfortunately, people apply this where it isn’t appropriate.
How much time should a creative task take? If a brain surgeon removes a tumor in 6 hours on average should the criteria for doing brain surgeries move from “successfully removed tumor and patient lived” to “remove a tumor in 6 hours or less?”
The trick is to know what’s a creative activity versus a rote task. The audit is designed to help entrepreneurs find out what activities are effective and efficient and which ones are neither.
When my clients use the Leadership Task Filter and the Optimal Activity Audit throughout their business, they experience an increase in profitability. Their company’s systems become more efficient (teams doing the right work faster) and effective (activities reliably get desired results).
How to use the Optimal Activity Audit
Ideally, you should audit every task in your company. The reality is this would take forever and cause more work than it saves.
Look to the highest impact positions first. These are typically in sales, marketing, service delivery, or production.
I do a lot of work with B2B service professionals (consultants, agencies, dev companies, etc) and I audit their deliverables first. I’ve found that a B2B service firm in the low millions has ingrained a lot of inefficiency into how they provide their services due to the trial-and-error creation of the company and they’ve not taken the time to get rid of what no longer works.
After doing the audit on one client, his company went from a barely breakeven to 30% net profit in 3 months (and that included adding my fees to their expenses).
Now that you’ve picked your highest impact departments, you need to have your team in that department create a list of all their activities plus a list of the results that they are responsible for or at least meant to achieve.
Then they need to prioritize those activities with the goal of determining which ones directly lead to the desired results of their department/job. They will most likely find tasks that could be optimized, restructured, or even eliminated. Finally, they need to track how they spend their time for a month or two to see how much time is used per task to get an idea of the impact/profitability ratio from their activities.
Optimal Activity Audit Process
- What is the objective of the department the person works in?
- What is the objective of the job the person does?
- What are all the tasks the person does in the course of his/her job?
- How long does it take to accomplish those tasks on average?
- Which tasks directly contribute to the department’s objective?
- Which tasks support (required) the tasks that achieve the department’s objective?
- Which tasks are done, but have no clear path to the department’s objective?
- Here is where a lot of busyness occurs that can be eliminated.
- Tasks that can’t be eliminated can be restructured to take less time and probably automated.
- Out of the tasks that get to or lead to the desired results of the department, which ones give 80% of the result for 20% of the time?
- Here is where you may find people spending too much time on a required task that doesn’t generate much toward the result. Those tasks are prime for restructuring.
- For the tasks that create the greatest results for the department, how can you do them more? Or are you actually at the optimum operation of those tasks?
Deliverables Case Study
I had one of my clients, an online marketing agency, do the Optimal Activity Audit with their deliverables. I started them there because profits were non-existent even though they had stable recurring revenue from his client base. I compared his company to the Rule of One-Third to see if labor costs were out of control, and, woo buddy, were they. He had some projects with 86% of revenue going to labor costs — ultimately his other clients were subsidizing these projects.
Turns out that the SEO team was doing a job that was sold to the client that no longer provided any SEO benefit. At the same time, they were also doing a job that actually got results for the client.
The owner had sold Job A (not getting results anymore) to the client, but not Job B (getting results). But to give the client the result promised, he had his team do both jobs — the one sold and the one that gets results. He thought he had to give the promised job to keep the client happy, but also knew that he had to get results, too.
I told him to go to his clients and tell them that his team was going stop doing Job A and were going to do Job B for the client and the reason why. This allowed him to cut the workload of his team. He immediately dropped labor usage from highs of 86% of revenue going to project labor down to an average of 42% across all SEO clients.
With less time going to each project, his online marketing agency had increased capacity to handle more clients with the same team size.
Marketing Team Case Study
With another client, marketing projects were taking a couple months to complete, even small initiatives, and ultimately were not generating enough traffic to boost sales.
What was uncovered with the Optimal Activity Audit was something that I’ve come to expect with smaller teams guided by a startup founder…
No one on the marketing “team” talked to each other. All communications went through the marketing manager. The reason this happens in bootstrapped businesses is that the founder(s) did the job first before handing it over to a manager, who was most likely a previous marketing team member. All communication would go through the founder. This is style of management the new manager was indoctrinated into and would continue the same processes as the founder.
The person in charge of Facebook ads spoke only to the marketing manager. When changes to marketing occurred, the manager told each person individually and told them what they needed to do. If there was any work that needed cross-communication with other team members it would go to the manager and then to the other person and then make a round trip through the manager, too.
Marketing teams that run this way are super inefficient, but they are also ineffective. That never have cohesive marketing messages let alone solid campaigns that enhance the mission of the company. If they get any profitable results, it is just from the shear amount of work the manager does to hold it all together.
Before fixing their tasks and teaching the team how to create and run marketing campaigns, I instructed the marketing manager to hold weekly marketing team meetings. And… the big one, let all team members talk to each other directly.
Within weeks, the team had increased quality traffic and generated leads that converted.
Reading this training, you may think, “That’s so simple. How come they didn’t think of this before?”
The reality is startups lack resources and no clear path to success so they mash together activities until they get semi-reliable results even if it takes extra time to achieve it. They stay really busy because they want to keep growing. Because they are so busy they don’t take the time to restructure or eliminate sub-optimal activities, which take more time and therefore make them even busier.
At some point, founders and their leadership team have to say “enough is enough” and clean up operations.
Are you at that point? I hope so. Set up a meeting with your team and start auditing your company’s activities today.
After you’ve completed it the first time, revisit quarterly if you are growing rapidly.